Schindler India ~ Case Study

GROUP 10

SHANTANU AGARWAL C004

PRACHI ARORA C006
ROUNAK JINDAL C028
JATIN KOCHAR C032
VARUN PRABHAKAR C050
KUMAR YASH C066
History of Schindler
• Robert Schindle established the company in 1874 in Switzerland

• Company began manufacturing elevators in 1889

• Did not have a local market base in India until 1950s by appointing a local distributor

• Alfred N Schindler took over the company in 1987; becoming the 4th generation in line

• 1998 : Schindler increased revenue worth $ 6.6 billion around the world

• Company has over 38,000 employees in 97 subsidiaries

Napoli’s First Project in Schindler
• The project goal was to develop a standardized elevator at a lower cost than the
existing, more customized product

• The outcome was the S001 an elevator that can’t be customized

• Used many parts supplied from outside

• Used newer process

• The entire supply chain was restructured

• Cycle time was reduced to half of the standard 20- to 30- weeks
Schindler :: Indian operations
• 1925 – The First elevator by Schindler in India installed

• 1958 – Long Term Distribution Agreement with ECE(an IndianOrganisation)

• 1985 – Termination of Distribution Agreement with ECE

• 1985 – Technical Collaboration with Mumbai based company Bharat Bijlee Ltd.
1 BBLwas authorised to manufacture, market & sell Schindler products in Indian market
After acquiring 12% equity stake in BBL, Schindler became the No.2 player in Indian elevator market.
A decade later they maintained 10-15% share in market

• 1995 – Alfred Schindler visited Indian market to review the market potential, he found there
was huge growth potential in Indian elevator market & found it was similar to China
• 1995 – To take management control in Indian market, Schindler proposed BBLa new JV, but
negotiation proved difficult & finally collapsed

• 1996 – Collaboration with BBLended and Schindler began considering options to establish
own operations in India.

• 1998 – March ‘98, Silvio Napoli was sent to establish Schindler business in India
The Indian Entry Project
• Boston Consulting Group (BCG) was engaged by Schindler to look for alternative
local partners as negotiations with BBL broke down in India

• It was now legally feasible to start up wholly owned company in India for a
multinational

• A business plan for Schindler Market entry was approved by the Corporate
Executive Committee (VRA) in October’95

• Mr. Napoli was offered the job of creating the Indian subsidiary

• In November’95, Mr. Napoli came to India for the first time

Schindler India Organisation Chart
Agent in Pakistan
Silvio Napoli Agent in Srilanka
VP S Asia Operation Agent in Bangladesh

M.K. Singh
Managing director

T.A.K. Mathews Ronnie Dante J. Jena Pankaj Sinha

Field Operation Engineering Finance Human Resources

Technical
New Installation Hade of Logistics Executive
Development

Account Vendor Administrative

Management Development Support

Support Commission Executives

Trainees Support

Hade of Existing
Installations

Existing Installations Team

leader/Team member
Man Mgmt.: Developing the Relationship

• There were initial clashes of timetable of the senior staff as they were still not
finished with their previous job

• Different management styles of the top executives also led to problems

• Silvio Napoli was regarded as a tough and aggressive manager by the staff members

• The scenario greatly differed from where Mr. Napoli came from and India

• The internal environment of the organization was informal according to the

employees
The Indian Business Plan
 The plan had two basic elements :

• Sell a focused line of standard products

• Outsource key manufacturing and logistics functions

 The business had many opportunities coming up in India after the liberalization of
Economy in 1990’s

• Construction industry was reviving

• Rapid urbanization

• A ban on collapsible gate elevators was enforced by the Indian Standards

Institute (ISI)
The Indian Elevator Market :

•Manual Elevator’s contribution was highest with 50%MS

•Otis was leading the segment •Service was the key parameter followed byPrice
Competition
Schindler India faced the competition from four major companies; they were:

Otis ( market leader, with 50% market share)

Kone ( market challenger, 8.8% market share)

BBL (Market Follower, 8.6% market share)

ECE( market follower, 8.4% market share)

Otis was a threat for Schindler India because it already had a good customer
base, 61.5% of which were under maintenance contracts
Business Challenges

• Sales force was bringing in orders, but not for the standard products

• The transfer cost of S001 has increased

• The import duties on elevators has also increased

• There was lack of motivation in the organization about the sales strategy
Outsourcing Strategy
• Silvio Napoli's business plan was to outsource the production of 90% of the
components of S001 from local suppliers

• the safety equipment would be imported from Schindler plant in south-east Asia

• The basic on-site assembly work would also be outsourced

• Eventually they would install their own dedicated plant to manufacture the parts
Conclusion
• The business plan was partially successful

• Lack of contingency measures, however their lack of enthusiasm to follow them

• Value congruence was not achieved in the organization

• Lack of goodwill had an impact on the sales

• Communication problems with the European superiors increased pressure

• Non-cooperation from the European plants

• Commitments to the booked orders

• Need of the customers were judged wrongly

• Lack of vision
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